National Health Realty Inactive

National Health Realty Inc. (NHR) is a Maryland corporation formed during 1997 and in operation since January 1, 1998.  NHR, through its subsidiary NHR/OP, L.P. (the Operating Partnership) currently owns 16 licensed skilled nursing facilities, six assisted living facilities and one independent living center (the Healthcare Facilities).  We additionally own first mortgage secured promissory notes with an outstanding balance of $12.5 million (the Notes).  The Healthcare Facilities and the Notes were originally acquired on December 31, 1997 from our then sole owner National HealthCare Corporation (NHC), (formerly National HealthCare L.P.).  NHR leases the Healthcare Facilities pursuant to certain lease agreements.  Fourteen of the Healthcare Facilities are leased to NHC and nine are leased to nine separate Florida corporations.  These leases covering the Healthcare Facilities are “triple net” leases, meaning the tenant shall pay all charges and expenses in connection with the leased property throughout the term of the lease.  The Notes are secured by nursing facilities and separate makers and guarantors.  NHR's revenues and sources of cash are derived primarily from the interest and principal payments on the Notes and from rent payments, primarily from NHC, under the leases.